So, Boston.com has a real estate blog called The Boston Real Estate Blog Boston Real Estate Now.
Here, blogger Rona Fishman, a real estate agent, wonders aloud about the Commonwealth’s hot real estate market of the past several years:
[T]hree or four years ago when median price passed median affordability, demand did not decline; it increased.
I have been scratching my head over the “why� of this for years now. Here are some of the reasons: people really want to live here and will do extraordinary things to make that so. Some have inheritance and gift money. Some drew money from savings or retirement. Many drew money out of the stock market just before or during the crash of the “Dot.com� market.
A commenter had an especially tasty response:
Are you serious? You don’t understand why prices went so far out of line with incomes over the last few years? Simple – cheap, easy money. Hand half a million dollars to a financially illiterate consumer with a credit score under 600, no down and an annual household income of $50,000 and of course he will go out and spend every dime regardless of ability to repay the loan or not. Of course people will continue to buy – even in Japan where prices fell for 15 years there were still transactions. But to assume this minuscule demand, compared to the mania of the last few years, will keep these prices so out of whack with underlying incomes and rents, is ridiculous.
I have no doubts you are not alarmed at the decline we are seeing. But the people starting to lose their homes in huge numbers are. My sole hope is that they will be able at some point to sue realtors for giving financial advice without a license, something no investment advisor can do. Keep telling your clients that real estate is a great deal and that at most they will only see small temporary declines. I am sure the commission you receive is well worth the lives that get destroyed by the pseudo economic science you spin. And if you think I sound angry, maybe it’s because of the four families I’ve already seen go through foreclosure – three of whom had realtors swear that real estate only goes up. It is sad that this profession is now below used car salesman on the trust scale.
Dude, lay off the sauce.
Source: So Few Can Buy, Won’t Prices Go Down? – By Rona Fischman, Boston Real Estate Now
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